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The dynamic capabilities framework implementation in innovation and

creative ecosystems
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Annual Session of Scientific Papers "IMT ORADEA 2019" IOP Publishing
IOP Conf. Series: Materials Science and Engineering 568 (2019) 012007 doi:10.1088/1757-899X/568/1/012007

The dynamic capabilities framework implementation in

innovation and creative ecosystems

E Avram1, S Avasilcai1, C A Hutu1, A Bujor1

“Gheorghe Asachi” Technical University of Iasi, Blvd. D Mangeron no 29, Tex 2,
Doctoral School, Iasi, Romania

egalateanu@tex.tuiasi.ro

Abstract. The arising concern for the inter-industry collaborations was concretised through the
continuous development of new collaborative structures as it is the case of business ecosystems
emergence. The use of open innovation in existing ecosystems became an essential trigger for
the emergence, defining and development of dynamic capabilities. Consequently, these
capabilities were used as the most relevant resources in value networks evolution as they defined
and created new ways for opportunities exploration and exploitation especially within existing
ecosystems. From this point of view the current research seeks to identify and define what are
dynamic capabilities, to present the existing framework of capabilities analysis and to understand
how it is used in practice within existing ecosystems. Also, this research seeks to uncover how
collaborative efforts and the use of innovative technologies influence organisational growth.

1. Introduction
Business ecosystems emergence and development was triggered by the need to establish a
comprehensive framework where collaborative relations were perceived as mechanisms for actors’ co-
evolution [1]. From this point of view, in order to ensure collaborative processes implementation each
ecosystem’s participant should design own business model so that it could provide and support the
creation of required capabilities for ecosystems orchestration [2].
The arising technological challenges along with the increasing attention for continuous innovation
and value creation represent weighting factors in business model innovation processes. As companies
strive to adopt new technologies and to engage customers into critical internal processes, new innovation
capabilities are acquired. Teece suggested the relevance of dynamic capabilities as a binding linkage
between a strategic and entrepreneurial approach to the use of internal resources and firm’s capability
to establish collaborations with various external partners [3]. This approach requires a continuous
analysis of arising opportunities in terms of their exploration and exploitation [3]. In terms of business
ecosystem perspective, the development of dynamic capabilities first of all depends on internal
innovation of each engaged actor (e.g. universities, complementors, financial agencies, etc.) [4].
Subsequent, based on the key aspects presented, there will be highlighted the dynamic capabilities
framework and its relevance for ecosystems ‘development within different industries.

2. The dynamic capabilities framework: an innovation ecosystem perspective

For the first time the dynamic capabilities concept was closely linked to the Resource Based View
theory. However, according to the Wang and Ahmed this approach seems to be static and do not reflect

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Annual Session of Scientific Papers "IMT ORADEA 2019" IOP Publishing
IOP Conf. Series: Materials Science and Engineering 568 (2019) 012007 doi:10.1088/1757-899X/568/1/012007

entirely the nature of dynamic capabilities. The main identified gap suggested that RBV reflects only
the firm’s perspective on the necessary internal resources [5]. In terms of business environments
dynamics this approach is no longer valid It seems neglected the fact that dynamic capabilities should
reflect not only organizational resources perspective but also strategical view by implementing specific
processes (e.g. to establish new partnerships) or product development [6]. Also, they can be perceived
as an important strategical tool as this concept emphasizes the relevance of organizational attributes in
dynamic business environments [7]. From this point of view dynamic capabilities emphasize the
relevance of organizational routines which are seen also as organizational capabilities [8]. According to
Salvato and Vassolo the engagement of the human resource and continuous dialogue building contribute
to the creation of the internal knowledge base necessary for opportunities exploration and exploitation
[8]. More than that Bingham et al suggest that learning process can be achieved though learning
processes of the past experiences [9].
According to Teece the emergence of innovation ecosystems rises also the concern for new type of
resources and dynamic capabilities development in order to ensure the companies adaptability to the
new market’s requirements [4]. Thus, it is more about how to build collaboratively new capabilities for
innovation rather than owning them. From this point of view, the building process of dynamic
capabilities requires three main stages: sensing, seizing and transformation [4], presented in figure 1.
Sensing

Seizing

Transforming
Entrepreneurial activity Internal R&D activities Creating and capturing
Identification of Identification of new value
opportunities partnerships Business model
Scanning and Learning New technology innovation
involvement Continuous
organizational
adjustment

Figure 1. The dynamic capabilities framework according to Teece [4].

Williamson explored the dynamic capabilities framework in terms of creating innovation. According
to the author the use of open innovation, social media and the creation of dedicated platforms contribute
to the experience building by acquiring necessary knowledge in a dynamic way [10]. The major arising
implications are linked to the dynamic response from the market, adaptability to the continuously
changing customers’ preferences, product modularity, the use of waterfall type of processes and the
creation of virtual services [10]. Therefore, the dynamic capabilities framework emphasizes the
relevance of building and adopting flexible and dynamic type of processes rather than static ones. Hence,
the companies from innovation ecosystems should be able to adapt to the continuously evolving market
requirements.

3. Appling the dynamic capabilities framework in innovation ecosystem versus creative one
The concepts of innovation and creative ecosystems by definition suggests the engagement of different
type of stakeholders into co-creation processes. However, the main different lies in the type of resources
used in order to acquire necessary knowledge, the product development processes and innovation
capabilities built by actors. Innovation ecosystems, from the dynamic capabilities’ perspective, can be
perceived as a dynamic structure which combines knowledge base derived from external partners with
various experiences, abilities and capacities [11, 12] and usually can be observed in the case of keystones
actors [13]. In the case of creative ecosystems along with continuous innovation, the building of
necessary knowledge base is perceived as a creative process which especially implies the engagement
of the creative community [14]. In this type of ecosystems, the building of innovative capabilities is
grounded to the symbiotic relations and dynamic interactions among different type of stakeholders [14].
In order to illustrate how dynamic capabilities framework can be applied in innovation and creative

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Annual Session of Scientific Papers "IMT ORADEA 2019" IOP Publishing
IOP Conf. Series: Materials Science and Engineering 568 (2019) 012007 doi:10.1088/1757-899X/568/1/012007

ecosystems there will be taken into consideration two cases: Electrolux innovation ecosystem and
99designs creative ecosystem.

3.1. The dynamic capabilities framework in Electrolux innovation ecosystem

In order to understand how dynamic capabilities are built within an innovation ecosystem there was
selected the case of Electrolux, as the company itself is well known for a remarkable history of created
innovations. Founded in 1919, Electrolux has known multiple transitions especially in terms of
innovation implementation in product development [15]. According to their philosophy, innovation
represents the main driver of organizational growth and success [15].
The Electrolux innovation ecosystem comprises a variety of collaborative relations with internal and
external stakeholders: employees, suppliers, open source organization OSF, Google, start-ups, etc. [16].
By promoting and implementing the open innovation and co-creation processes the main concern of the
company, as a part of an innovation ecosystem, is to build innovative dynamic capabilities. In table 1 is
presented an analysis of the dynamic capabilities created by Electrolux based on Teece framework.
Table 1. The dynamic capabilities framework: the case of Electrolux Innovation Ecosystem [17-22]
Sensing

Seizing

The use of open
innovation
The potential of
connected products -
Internet of Things
ecosystems
Shift to customer-
centric production
Design new structure -
Innovation Triangle
Use creative potential
of design students
Promotes innovative
organisational culture
Transforming
Created dedicated Continuous innovation
platforms (Design Lab, of product portfolio
Ideas Lab) Implemented three-
Use employees creative steps development
potential through the process focused on
brainstorming session consumers' wellbeing
iJam experience
Partners with different Ensures the remote
alliances (Allseen), connectivity and
Non Governmental interactivity between
Organisations (OSF) or customer and
ecosystems (Internet of appliences
Things, Drop) Offering interactive
Implemented ethernet and intelligent products
network for internal
communications
Use of the 5G
technology in product
development

3.2. The dynamic capabilities framework in 99designs creative ecosystem

Established in 2008, 99designs represents an important key player within graphic design creative
ecosystem [14]. According to the company beliefs 99designs seeks to promote creative potential of the
young designers and there should not exist barriers between innovative ideas and their dissemination
[14]. Concentrated entirely in virtual environment the creative ecosystem of 99designs offers an
interactive meeting point for customers and potential designers, limited timeline for contest development
and is capable to reach a large pool of stakeholders [14].
In terms of participating actors, 99designs is mainly concentrated on their suppliers (potential
clients), graphic customers and graphic designers [14].

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Annual Session of Scientific Papers "IMT ORADEA 2019" IOP Publishing
IOP Conf. Series: Materials Science and Engineering 568 (2019) 012007 doi:10.1088/1757-899X/568/1/012007

Table 2 The dynamic capabilities framework: the case of 99designs Creative Ecosystem [14,23, 24]

4. Findings and Conclusions

The dynamic capabilities seem to be the most relevant tools in opportunities seeking for companies.
Based on Teece’s framework applied in different ecosystems there can be found that each stage of the
dynamic capabilities’ development seeks to present different aspects especially from the innovation
point of view. Sensing stage is relevant for companies in order to understand the dynamic changes in
different markets. Companies are rather concentrated on acquiring new knowledge from the external
environment or other relevant actors than on own resources and capabilities. It is relevant at this stage
to explore the arising opportunities in ecosystems in terms of the technology development or other
technological challenges. This type of knowledge represents an important trigger for organizational
growth and transformation (e.g. rebranding process or new organizational structures development).
Seizing stage represents the first step in building own capabilities. At this stage companies come forward
with new technological solutions (e.g. platform development for co-creation or crowdsourcing). In
innovation ecosystem this stage is concretized by adopting new communication technologies or 5G
technology implementation in product development. However, in creative one, the case of 99designs,
company adopted a creative approach by using social media and virtual environment only. The
transformation stage comprises the results of companies’ efforts in order to create own dynamic
capabilities. It is more about how to ensure continuous value creation to the customers, to be able to
respond to their needs and to create an interactive environment. However, as it can be observed in the
first case it targets especially the value created by product innovation. In the case of 99designs there can
be traced a remarkable attention for community involvement and value created by creative crowds.
Consequently, the dynamic capabilities framework offers a variety of valuable insights on how
companies are evolving in platform-based ecosystems and provides interesting findings in terms of
innovation dynamic capabilities developed by different actors.

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Annual Session of Scientific Papers "IMT ORADEA 2019" IOP Publishing
IOP Conf. Series: Materials Science and Engineering 568 (2019) 012007 doi:10.1088/1757-899X/568/1/012007

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